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IBEF works with a network of stakeholders - domestic and international - to promote Brand India.

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Authors

Dikshu C. Kukreja
Dikshu C. Kukreja
Mr. V. Raman Kumar
Mr. V. Raman Kumar
Ms. Chandra Ganjoo
Ms. Chandra Ganjoo
Sanjay Bhatia
Sanjay Bhatia
Aprameya Radhakrishna
Aprameya Radhakrishna
Colin Shah
Colin Shah
Shri P.R. Aqeel Ahmed
Shri P.R. Aqeel Ahmed
Dr. Vidya Yeravdekar
Dr. Vidya Yeravdekar
Alok Kirloskar
Alok Kirloskar
Pragati Khare
Pragati Khare
Devang Mody
Devang Mody
Vinay Kalantri
Vinay Kalantri

Indian M&E sector - The growing Short Form Video industry

Indian M&E sector - The growing Short Form Video industry

Indians presently consume about 20GB of data per month on average, ranking first in the world, and this figure is anticipated to rise to 46 GB by 2027 (EY). By 2025, there will be more than 40 million daily active users of smart connected TV sets. With disruptions like free digital IPL on Jio Cinema, a digital forward economy has already seen content and data consumption levels reach enormous proportions by global standards. Online gaming is expected to reach 500 million players by 2025, making it the third largest area of the Indian M&E (media & entertainment) sector, due to 5G and the transition of feature phones to smartphones (EY). Advertising surpassed the Rs. 1 trillion (US$ 12 billion) milestone for the first time in 2022 (EY). In 2022, digital advertising generated 70% of the absolute growth in advertising (EY). The M&E sector is predicted to develop at a CAGR of 10.5% to Rs. 2.83 trillion (US$ 3.39 billion) by 2025, up from Rs. 2.34 trillion (US$ 2.81 billion) in 2023 (EY). India has the highest level of linguistic fractionalization and the second-largest number of living languages (RedSeer Strategy Consultants).

Short Form Videos (SFV) have achieved significant popularity in recent years, because of global players such as TikTok and Instagram. Since TikTok was outlawed in India, many homegrown short-form video (SFV) applications have been developed in the market that cater to the various local content demands of users. This has caused these platforms to compete fiercely, which has led to the creation of cutting-edge features and an improved user experience. Union Minister for Information and Broadcasting, Mr. Anurag Thakur, predicts that India will become the third-largest media and entertainment market in the world in the next five years (2023-28). He also added that India is currently the 5th largest in the world in terms of the M&E industry. The pace of innovation has not slowed, and it will continue to accelerate. Digital media will play an important role in the near future, and the outcome is promising. The Government of India has established the Digital India programme to harness information technology to modernise the entire ecosystem of public services, to transform India into a digitally empowered society and knowledge economy.

The Indian Digital Ecosystem

According to a report by Dentsu-E4M, the Indian digital industry will develop at a 29% annual rate, reaching a market size of Rs. 35,809 crore (US$ 4.30 billion) by the end of 2023. It is estimated to contribute 38% to India's overall advertising sector. Ad spends on online video are expected to expand at a CAGR of 34.86%, reaching a share of 30% (Rs. 10,474 crore (US$ 1.25 billion)) of the digital advertising market by the end of 2023. Social media is predicted to increase at a CAGR of 29.79%, with a spending share of 29% (Dentsu-E4M). By the end of 2023, paid search will have a spend share of 22%, while display banners will have a spend share of 16%. People are becoming more digitally aware, and with the internet reaching every home, digital media has built a presence in the country. Companies such as Swiggy, Zomato, and Uber Eats have transformed the restaurant industry by assisting them in reaching their target clientele. Similarly, Zoom-Car, Uber, and Ola have altered the face of travelling.

According to a report by EY, (as seen in the data below) the M&E industry increased by Rs. 348 billion (US$ 4.17 billion) (19.9%) to Rs. 2.1 trillion (US$ 25.2 billion), a 10% increase over pre-pandemic 2019 levels. Television remained the largest segment with 10% growth and 166 million households. The digital media reinforced its position as a strong number two with a growth rate of more than 30%, followed by a resurgent print. Digital media expanded the greatest, reaching Rs. 132 billion (US$ 1.58 billion), increasing its contribution to the M&E sector from 16% in 2019 to 27% in 2022.

Segment Wise Revenue Share of the Indian M&E Sector

Segments

2019

2020

2021

2022

2023E

2025E

CAGR (2022-25)

Television

787

685

720

709

727

796

3.9%

Digital media

308

326

439

571

671

862

14.7%

Print

296

190

227

250

262

279

3.7%

Filmed entertainment

191

72

93

172

194

228

9.8%

Online gaming

65

79

101

135

167

231

19.5%

Animation and VFX

95

53

83

107

133

190

21.1%

Live events

83

27

32

73

95

134

22.2%

Out of Home media

39

16

20

37

41

53

12.8%

Music

15

15

19

22

25

33

14.7%

Radio

31

14

16

21

22

26

7.5%

TOTAL

1,910

1,476

1,750

2,098

2,339

2,832

10.5%

Note: All figures are gross of taxes (in Rs. billion) for calendar years

Source: EY

Segments

Segment-wise Revenue Share (%)

Segments

2019

2020

2021

2022

2025E

Video

55%

69%

68%

66%

63%

Experimental

22%

16%

16%

21%

25%

Textual

19%

12%

13%

10%

9%

Audio

4%

3%

3%

3%

3%

TOTAL

100%

100%

100%

100%

100%

 Source: EY

  • Video

This segment includes TV, video OTT and short video. Despite the return to normalcy following the epidemic, the video remained the highest-earning segment in 2022, with an 11% increase in revenue share since 2019. In 2022, Indians spent 52% (nearly 25 billion hours) more time streaming entertainment material than they did in 2019 (EY). Hindi was still the preferred language for brands, followed by English and other regional languages. India contains 447 living languages and more than 19500 dialects (Redseer Strategy Consultants). The language, dialect, and culture all completely change every 20 kilometres in India.


Source: EY

  • Experiential

This segment includes online gaming, cinemas, events, and OOH. Experiential revenues were negatively impacted by the epidemic in 2020 and 2021, but they have recovered since then, and they are anticipated to witness share growth as India's per capita income rises.

  • Textual

This segment includes print and online news. The text has most likely suffered a permanent loss because of the decline in print circulation but will remain relatively stable in terms of ad and sub-growth, albeit at a slower rate than other media.         

  • Audio

This segment includes radio, music, and audio OTT. Because digital advertising and events continue to be a major part of audio revenue models, their revenue share is expected to remain consistent.

The Indian Shortform apps

Short-form content is concise, direct, and to the point. It's intended to be "snackable," which means that it may be consumed in a matter of minutes (or even seconds). Short-form content is defined as anything less than 1,200 words in length. Short-form videos (SFVs), such as those available on TikTok and Instagram are emerging social media platforms in which users can produce and share online SFVs through SFV apps. Users can create videos ranging from seconds to minutes that include numerous elements of their lives, such as food, songs and dances, fitness, pets, travel, health, and technology. To communicate with others, users can also browse and like their videos. Based on an analysis of the user's preferences, SFVs deliver personalised content to the users. SFVs also include entertaining stickers, video editing tools, and special effect filters to assist users in creating amusing films. These personalised contents and amusing elements have an addictive hedonic value.

Stakeholders

In recent years, several domestic short-form video (SFV) platforms, including Moj, Josh, and Chingari, have become more well-known in the nation's expanding creator community in recent years, and international players like YouTube Shorts and Instagram Reels have only served to accelerate this rise.


Source: PG Labs

According to influencer marketing firm Zefmo, India will have the most social media content providers in the world, with a total of 100 million this year. In FY24, the organised influencer marketing industry is expected to generate Rs. 3,000 crore (US$ 360.26 million), with micro-influencers expected to contribute 14% of the sector's income, up from 9% in FY23 (Zefmo). Despite the emergence of Indian short video platforms in the last two years, the Zefmo survey indicated that YouTube and Instagram remained the top options for social media influencers. While YouTube accounted for 38% of the market, Instagram accounted for 11%, with Twitter and Facebook following at 6% and 9%, respectively. The fast-moving consumer goods (FMCG) brands accounted for 53% of social media brand initiatives, while direct-to-consumer and electronic device corporations accounted for 14% and 9% of brand campaigns, respectively (Zefmo). Brands are leveraging hyperlocal micro-influencers to strengthen connections, particularly through the short video format.

According to a RedSeer Strategy Consultants analysis, the Indian short-form video (SFV) market monetisation is on the verge of a breakout. The market size of short-form video (SFV) could potentially be worth US$ 8-12 billion by 2030, due to a surge in smartphone use and usage. Additionally, the survey forecasts that by 2030, virtual gifting on short-form video platforms in India will reach US$ 1.7 billion. Leading Indian SFV applications are virtually catching up with global competitors in metrics such as Monthly Average Users (MAU) and Daily Average Users (DAU).


Source: Redseer Strategy Consultants

Current Trends

  • The Indian SFV apps have grown in adoption and engagement and even outperformed global SFVs.


Source:
Redseer Strategy Consultants

Indian SFV apps are narrowing the gap with their globally equivalent competitors, both in terms of offers and the level of satisfaction exhibited by both users and creators. Many creators/influencers with a huge following have emerged in certain categories such as fashion, cosmetics and personal care, fitness, and reviews. Indian SFV players' technology is also catching up with the technology of their global counterparts. Furthermore, both Indian and worldwide apps provide equivalent degrees of happiness to consumers and producers. (Redseer Strategy Consultants).

  • Creator Economy


Source:
Redseer Strategy Consultants

Individual producers are now creating their online identities because of the increased consumption of User generated content (UGC). Brands that previously made lengthy advertisements are now concentrating more on Influencers for their ad spending due to their better efficacy. When compared to other marketing channels, influencers with a niche following in many categories provide a higher return on investment for businesses. As corporations strengthen their relationships with influencers, it is anticipated to witness an increase in advertising on SFV platforms. However, because companies and influencers typically work through intermediary agencies, there is a barrier preventing the industry from reaching its full potential. As more UGC platforms launch their own Creator Marketplaces, centralised networks will make it easier for brands to engage with suitable artists. It is anticipated that influencer marketing will reach US$ 2.8–3.5 billion by 2028 as influencer-led marketing becomes more prevalent among firms and e-commerce platforms leverage them in video commerce (RedSeer Strategy Consultants).

  • Monetization of Indian SFV apps


Source:
Redseer Strategy Consultants

With an ever-growing user base across metros, Tier 1, and Tier 2+ cities, SFV monetization is on the verge of a breakthrough. SFV platforms and eCommerce players are looking at a total market share opportunity of US$ 8-12 billion by 2030 by unlocking value across advertising, video commerce, and live gifting (RedSeer Strategy Consultants).

  • SFV apps have significant potential for digital advertising


Source:
Redseer Strategy Consultants

There exists a mismatch between ad expenditure by brands and companies and time spent on content consumption by average users. While individuals spend 7-10% of their content consumption time watching short-form videos, they account for less than 1% of digital Ads. Bridging this gap provides the potential to boost the SFV advertising industry from US$ 80-90 million in 2023 to US$ 3-6 billion by 2030 (RedSeer Strategy Consultants).

  • Short Form content on eCommerce platforms


            Source:
Redseer Strategy Consultants

Major eCommerce platforms such as Amazon and Flipkart have implemented video commerce functionalities, with Myntra and Nykaa following the suite. Shopatainment is what truly distinguishes live-stream shopping by potentially shortening client decision journeys from awareness to purchase. In terms of shortform content market share, fashion and beauty and personal care (BPC) are the top-performing categories, accounting for 40% of the pie (RedSeer Strategy Consultants). The online reputation of an influencer catalyses the customer journey from awareness to purchase, making it an efficient channel for marketers.

Road Ahead

Presently, over 45 million users in India create and share at least one short-form video per month. This is fuelling the development of a thriving creator economy--an enabling ecosystem of stakeholders assisting creators with content production, monetization, finance, and business management. The market for short video apps in India is new but thriving. The emergence of short video apps in India has also given prominence to the creator economy. The success of Instagram Reels and YouTube Shorts highlights the need for scale to support short videos as a possible monetisation possibility. According to a survey released by Oxford Economics, YouTube's creator ecosystem provided significant economic value, contributing Rs. 6,800 crore (US$ 816.59 million) to the Indian GDP and sustaining up to 68,39,001 full-time equivalent jobs in India in 2020.

According to the RedSeer analysis, Indian apps lead the way in content development in three of the top five content genres, with a notable difference in offerings related to music, dance & conversation, or acting content. Short video apps have quickly become an important element of India's digital media ecosystem, with an active user base of over 250 million, which is predicted to grow to 650 million by 2025 (PG Labs). The Indian market for short-form video apps is booming and has a lot of space for expansion.

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